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tv   Worldwide Exchange  CNBC  May 15, 2015 4:00am-6:01am EDT

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welcome everyone. you are watching worldwide exchange. here are your headlines from around the world. shares trade lower amid concerns over liquidity. the hang seng rallies on a trading link. >> euro comes off a three month high versus the u.s. dollar with bond yields in retreat. roche has strong results from key cancer drug triels. and a south african investment firm pays $1 billion for a
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controlling share in british retailer new look. >> welcome to the show. the hang seng has been rallying lead by a spike in property stocks but analysts are still looking for an explanation for the pop. speculation of a tie one hong kong and the shenzen was boosting equities. let's get out to sri live in singapore with more on that story. catching a lot of traders by surprise here. this move in the hong kong market. >> yes. we're trying to get more clarity on that but the hong kong exchange pretty conclusively poured cold water on the situation. it's going to happen but not imminently as some have been im
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implying. the broader market, the hang seng up by 2%. some divergence. we're going to see more ipos and that liquidity is going to deprive the main board from the activity on the listed markets. that's one of the concerns that the mainland investors have. that's why we're seeing some cooling off in the market over there but all in all it was a robust session. the dust is settling on the route in the european and u.s. bond markets. one doesn't know whether there is a second phase of volatility and second phase of selling in the bond markets but here and now they seem to be quite appeased by that as far as the regional market action is
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concerned. remember also we had a solid lead from wall street. that's backstopping some confidence out there but we're still trying to get a bit more clarity with what happened with hong kong exchange. that tie up will happen but not imminently. that's what the rumors and speculation were imlying. that this would happen as early as today. but they're saying that is not the case but we're still watching shares around 2%. back to you know. >> umbrellas popped up during the recent protests as young people took to the streets. now umbrella maker shares are popping on the hong kong exchange. it's the best performing newly listed stock on the hang seng index in 2015. it traded 20 times higher than it's ipo price and is trading at a price to earnings ratio of 100. let's get you a check of how
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stocks are are trading on this friday after what has been a volatile couple of days trying to hold on to gains despite the strength of the euro. the stoxx europe 600 trading at 399. it's come off the highs of the day. breaking down the trade you can see that the ftse 100 is trading higher. also the election rally has tempered off a little bit due to the volatility in the bond markets. the xetra dax at 11,589. the big concern is the strength in the euro and what that means from those that benefitted from a weaker currency this year. let's take a look at how we're trading in today's session. currency in focus today. we did see the euro at 114. a couple of factors at play here. one is encouraging data in europe and disappointing data out of the u.s. the erratic move in the bond market is tempering investor
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enthusiasm. we're looking at the euro at 113. a bit lower than yesterday at 114. speaking of bonds it's been grabbing the attention of investors. enjoying a slight move to the upside today. yields of 2.19%. remember earlier this week we did see the ten year yield at 2.3%. that sent dividend paying stocks like utilities moving lower. mario draghi reassured investors they were committed to seeing through their program. they also responded to criticism that central bank stimulus was inflating asset prices. >> it's true that our low policy rates and asset purchases raise the current market value of financial assets and there by benefit the holders of these assets but what matters more is the exact mirror effect of this
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rise in asset price which is is a lower cost of equity for entrepreneurs, a lower cost of finance for investors in real projects and lower cost of borrowing for consumers. that being said we have to be mindful that too prolonged a period of real rates can have undesired consequences in the context of an aging society where many households save not just to smooth consumption over the cycle but over their lifetime. >> joining us now to discuss is lynn graham taylor. a pleasure to have you on the show. draghi yesterday said ecb's unconventional measures had proven to be effective. will qe be effective if we continue to see the euro gaining ground against the u.s. dollar. >> we see one of the major impacts of qe being a weakening
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currency. >> but if the data continues to surprise to the upside how can the euro not move higher from here? >> i think big picture our view of qe is in the short-term it will cause an increase in expectations but we don't think it brings about a true increase in economic growth. >> a lot of questions about the state of the consumer. firms and households are hesitant to take on economic risk. quite some time is needed before we can declare that. when do we see the consumer spending more. >> very difficult to say. the feed through we heard from institutional investors is the increasing asset prices gives you a reason not to invest. you could see a stage where qe
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inhibits wage growth but also doesn't help the increase in spending. >> another one is the dramatic drop in oil prices. that was supposed to be a gift to the consumer but that didn't really happen and the dramatic drop in oil prices spent consumers to save more money than actually spend. >> that's one of the difficult reasons when you have high debt levels. turning back to the euro zone the base effects mean that the decrease in oil drops out. that will help to get more inflation expectations at the back end of the year which we think is another reason why bond yields will sustain this current increase. >> draghi also said the ecb plans to implemented in full the full quantitative easing program until they see a sustained adjustment in the path of inflation. when do you think that is? when do we hit the target of 2%
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given the rebound in oil prices that's supposed to take off the inflationary defect? >> at the moment you have the base cases. they do run it until september 2016 come what may. so i guess that's our base case at the moment. they keep plowing onward until two years time. >> in the meantime what do you make of the implied volatility in the bond market? some of that perhaps being around what some traders say is because the ecb will scale back it's monetary support earlier than expected given the encouraging data we have seen. >> we think it was very much triggered by too much of a dislocation between beyond yields and where break even rates had gone. going forward we think it's a case where the reinflationary story trumps the lack of supply story. that follows a pattern seen in
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qe 2 and qe 1 in the states. the only factor is its likely to be a choppy ride in term of net supply going forward along with the regulatory background being different in terms of ware housing capabilities being smaller and exaggerating moves in the bond market. >> you don't think there's a fundamental reason. >> no we think a fundamental trigger but in terms of what's seen it take off quite so much is being emphasized by the background. >> short-term blip or long-term correction? >> three to six month correction. >> bill gross said you can expect german bund yields to rise to 2%. that's inevitable. do you agree? >> over a long-term horizon yes given what in theory drives bund yields but given the time horizon difficult to say.
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>> thank you. stick with us. we want your thoughts on greece as well. fixed income strategist. how should you be positioned in the fixed income space? head to cnbc.com for an interview with greg davis. head of fixed income at van guard. coming up on worldwide exchange more from the music streaming sector as we meet the latest app taking on industry giants. plus netflix is in talks to enter the high growth market. details coming up.
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let's look at the top stocks on the move in europe. roche is higher after strong results from cancer drug trials. tests found it doubled the likelihood of survival for some lung cancer patients. syngenta also higher after a reporter that they're making a new bid for the swiss rival that could come within three weeks. they're trying to line-up buyers for assets worth more than $8 billion to appease competition authorities. sab miller is higher after
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inquiring the british craft beer maker. up by 1%. south african investment group brait is paying $1 million for a stake in the retailer. shares opened up 3% on the deal. new look previously pulled plans for an ipo in 2010 due to weak market conditions. >> now our focus turns to greece. the imf says it's flexible with debt talks with athens and is hopeful of reaching a deal with international creditors. jerry rice said we're open to looking at all options. greece's next payment is for 310 million euros due on june 5th. athens extended an olive branch by inviting bids for a majority stake in the country's biggest port piraeus. it's lower than the 67% stake
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offered by the previous administration though the sale was put on pause when he came to power in january. julia joins us here around the desk. port privatization. is that a good sign? >> the timing is interesting but i don't think we should look at this in terms of a backtracking from the greek government because if there was backtracking involved it was done in february when the finance minister said we will ultimately privatize this port despite the fact that the government said there would be a full freeze on privatization. i don't think we should continue to look at the noise. they're expected to have another conference call today and it's expected they'll go to brussels and try to submit awe any reform propoelz and
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proposal and perhaps a meeting between the greeks and those in brussels on monday. the important thing is the talks are continuing. the question is will greece be able to cross red lines. >> i want to bring you into the discussion. how are you factoring greece into your consensus these days. >> the base case since the start has been that greece won't leave. the protracted nature of the negotiations has seen the percentage allocated decrease but we're still at 70%. it's just too difficult, this whole ramifications of greece leaving the euro zone is too huge to imagine that it would. >> if a greek exit was a big fear you wouldn't be seeing the moves you're seeing in the bond market. >> no, that's exactly right. there's the protracted nature of the negotiations makes it difficult but i haven't seen anyone that has base case of them actually leaving. >> you were just saying off air to me the real crunch comes when they have to make the ecb repayments in july and august time but we did have them saying
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yesterday they're concerned about the liquidity situation and while the government is issuing t-bills we know who is buying them and that's the banks. and they're getting liquidity so yes the crunch comes in terms of bond repayments but what about the concerns of the banking sector and that liquidity. >> the ecb regardless of the bank view has a huge amount of tolerance for a difficult time for the greek banking sector and refinancing greek sovereignty bills. so negotiations are on going and we find it difficult to make a call. >> the economy has already returned to recession. does it only get worse from here? >> it entirely depends on how the negotiations go on. in light of what's going on its difficult for businesses to make investment so it's all about the longer this drags on the worst
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the gdp numbers are likely to get. >> morgan stanley said what the market is underestimating is the fact that we still have another deal even if we conclude the latest program or the end of this program and whatever reforms that means. we still have a budget gap as far as that's concerned. that's still going to mean more reforms. i've seen all sorts offest m estimates but they could need between 80 and 90 billion euros. if we have struggled this far achieving the end of the final program what about the negotiations for a new program? >> we see the most likely be another form of stop gap. perhaps something that's suitable to everyone but everyone knows is going to need to be renegotiated in the future. it was talked about a few years agatha we all know that we're going to have to do something with the debt stock at some point. maybe pushing off that date for another year or two. >> which is fine but given what
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draghi said yesterday finally going to take qe to september of next year. what happens when we don't have the controlling element as far as the markets are concerned in the qe. >> for a long time there's been a lack of correlation now between greece and other periferal yields. people say it's about to get it's program extended. people say it's quite separated. >> so with or without qe. >> yeah i would be quite relaxed about whether qe is there or not on the greek side. >> i want to get your thoughts on the role that he's playing these at as because while he's been sidelined he's still out there making controversial statements. yesterday he said i wish we had never entered this monetary union. do these comments still have negative implications despite him being sidelined. >> it's interesting. we obviously have our history but a lot of what he says i agree with. for the people i speak to in greece people say they have already gone back to the
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drachma. they've seen 40 to 50% cuts in wages and pensions already. for the ordinary person it's not sustainable. at time his comments are untimely but the suggestion that he has been sidelined doesn't mean the approach of the government has been more nuisanced. >> time is running out. thank you for joining us with the situation on greece. music streaming had it's fair share of controversy in recent times but that's not stopped a number of services from popping up and taking on giants. now we went along to take a look at the latest app in line. >> there has been no shortage of headlines in the music streaming sector. from the relaunch of tidal,
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spotify's $8 million valuation, a lot of noise has been coming from the industry. streaming of music sold 54% last year while paid downloads of songs declined by 12%. in a t visited an event organized by new kids on the block. it's a stop style music streaming gap. users have the opportunity to listen to the music as a streaming service and virtually invest in artists they think can do well. >> we hope it's an alternative streaming platform that artists instead of uploading to the platform and earning micropayments they're actually given really valuable opportunities. >> unlike the established streaming platform it aims to cater the emerging artists helping to build their profile and garner a bigger fan base. >> i've seen more people liking
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my social platforms. a lot more people following and interacting with treats. social currency is everything in music. anyone can hear you on the internet. >> it finds itself in a hotly contest contested space. getting the foot in the door could be a challenge for the start up. >> you have very well backed giants such as spotify and apple and their plans for beats. also google. the recently launched tidal by jay-z. >> they face a number of obstacles in the rapidly growing industry. competition. opposition from parts of the music industry and fickle millennial user base could mean a bumpy road for the company. to succeed, they need to stand out among the crowd. >> because we offer something new which is focussing on music discovery. focussing on awarding our users
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and artists, i think the time is right. >> netflix may be ready to bring it's streaming content to china. the company talked with several online broadcasting companies about partnering with them. this includes a web firm backed by alibaba chairman. it's working on a modest launch for china if it can get permission to operate there. taking a look at shares on fire this year up about 2% in frankfurt. red flags have been raised about the sec's filing system after a phony filing sent the stock on a roller coaster ride on thursday. bob filed this report. >> it was an o d-day for avon. they were having a normal day trading around $6.60 at 11:30 a.m. in the morning. it caused it to be halted at the new york stock exchange.
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confirm supposedly filed an offer to buy avon for an exorbitant price. the stock reopened and immediately shot up again triggering another trading hole. by then traders on the hole were noticing it contained numerous typos. there were rumors they didn't exist. the stock went in the other direction dropping 5% and was halted for a third and final time. avon told us they have not received any offer or communication from any such company. they can't even confirm they exist. in other words it's a hoax. how did a phony filing get into the data base? the trading community assumes filings made in this data base are accurate and reliable and vetted by the sec. what happened? no comment from the sec, at least not yet. very strange. back to you. >> very strange. now the sec and u.s. attorney's office have charged a father and son who is an investment banker
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with insider trading. the sec says the scheme helped the father make more than 1 million on information related to five health care mergers. it allegedly involved tips and coded e-mails disguised as discussions about golf. sean stewart, a senior banker that also worked at j.p. morgan passed information between 2010 and 2014. both men were arrested on thursday. and still to come up on the show. stop the printing press. the bank of japan sees no further need for qe. so is abenomics finally working? we'll discuss that after the break. you're watching worldwide exchange.
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>> roche reports strong results from cancer drug trials. a south african investment firm pays $1 billion for a controlling share in the british retailer new look. all right. it has been a volatile session in china with shares seesawing between gains and losses. analysts are still trying to look for an explanation of why the stocks out performed. they were reportedly boosting equities but they have no plan to announce a deal on friday. now taking a look at european markets, equities could end the week on a strong note. gain across the screen after stocks sold off earlier due to sharp reversal in bond yields and the stronger euro.
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perhaps the rally on wall street providing a boost to sentiment in today's trade. we're looking at the dax at 11,610. up about .4% or 50 points. the ftse 100 below 7,000. a key psychological level traders watch but a gain of around 20 points. now all eyes on oil of course we have been seeing a rebound in oil prices now up about 16% year to date. so far this year oil prices had been rising but wti crude failing to hold on to that $60 level. a key resistance level for wti crude. right now trading at 5959 down about .5%. brent crude the international gauge at $66.60. we have been getting british construction data. u.k. march construction output seeing it's biggest rise since january 2013. not seeing that big of a move in sterling. sterling at 157 against the dollar basically flat.
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u.k. q-1 construction output down quarter over quarter versus q-4. we dropped quarter over quarter. stock specific news in asia stocks fall following disappointing earnings and vague announcement. let's get to the nikkei with that story. >> thank you seema. sharp shares drop to 186 yen today you today, a drop by 27%. some project the target price to end up at 40 to 60 yen which is 20 to 30% of the price today. sharp has been hit hard by the decline in demand for liquid crystal display televisions and fierce competition over smartphone screens and yesterday it reported a net loss of $1.8 billion for fiscal 2014. it's capital ratio is down to 1.5% and to keep it's operations
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afloat sharp will receive about $1.5 billion in debt for equity swaps for its two main lenders. it also decided against a capital reduction of 99% which was speculated and caused the stocks to nose dive. what really disappointed investors was the vague and weak management strategy. the company announced it will slash around 10% of the global work force and sell off it's headquarters buildings and it will create a system of operations as a way to speed management decisions. however not more information was given that left the market feeling these strategies lack detail. that's all. back to you. >> thank you. just want to break gdp data out of hong kong. hong kong q-1 gdp up 2.1% year over year. that's higher than economists were expecting. q-1 gdp up 0.4% quarter over
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quarter. that also beating expectations. so gdp up 2.1% year over year in hong kong and also on the quarter up 0.4%. that's quarter over quarter. now consumer confidence falling from 4.5 to 41.7. meanwhile, they repeated the stance saying further expansion in monetary easing is not needed at this point but some disagree. thank you for joining us. what do you make of the recent data? >> it suggests that abenomics lost a bit of steam. our thinking is that talking the economy s'up needed. further monetary easing they're
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clearly reluctant to press harder on the monetary accelerator. at some point a little bit more action is needed now too. probably not quite at this stage. we would agree with that. >> but isn't it better to address that earlier rather than later? they were hoping for further modesty depreciation and some elements of the deflation picture still suggests there's downward pressure. so those two are a disappointment. >> at some point should we see governor address the appreciation in the yen through unconventional measures? >> that's the issue. that's always something that will be held in reserve. so it threatens to break out of its ranges and depreciate big time then you can bet more monetary easing will be there to counter it.
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>> the other concern is if the yen continues to appreciate if that will temper tourism sales which has been one of the factors helping japan's economy. >> indeed. that's absolutely right. that's been a stimulus and there would be no wish to endanger that. >> when do you expect the yen -- what's your target on the yen for the full year? >> we don't set a specific target but we would really be looking to somewhere in the mid 120s as a kind of level to be reached. that would be in the comfort zone for the boj. >> taking a step back there's been so much excitement and hope that abenomics would provide the turn around to the economy. when do we see the fruits of the labor. >> i think there has been a very positive shock. >> deflation though still a very big concern. >> yes there is that. but there are global pressure with the oil price which is are beyond japan's control.
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so in terms of what would have been realistic objectives i would give it a 7 out of 10. there's still much more to be done. >> how big of a role can they play? that's the only bright spot for japan so far. >> yes, i think you could argue consumers are still wary and they're still arguably too much saving and actually turns out corporate saving is a problem because we want companies to invest and that's the way we were hoping that this recovery would broaden out and become more durable and the evidence on that is still a bit tentative. >> abe and modi are expected to find new ways to work together. perhaps encouraging investment by indian firms. do you think there could be an interesting opportunity between the two countries? >> absolutely. japan needs to open up a bit more in terms of investment
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migration, you name it and this is a good step in that direction. >> you're hopeful. >> i am. thank you for joining us to discuss japan. >> good to be here. >> speaking of modi china and india agreed to developing an economic relations task force. the two countries signed more than 20 business and cultural greemtds on the indian prime minister's trip to china. >> he's in china here on a three-day trip to improve trade ties between his country and the neighbor to the north. on his first day he met with the chinese president in the ancient capital and major city. the move is seen as a way for the two leaders to build close
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personal ties. the two toured before heading to beijing. china is india's largest trading partner but that's under strain because of border issues. he's hoping to set aside the differences to encourage economic cooperation as well as chinese investment on this trip. >> saudi arabia blasted rebels for breaching a ceasefire. this as they were charged with killing nine people with a helicopter gun ship. teheran threatened to send a warship into their waters to accompany a cargo boat carrying human tear aid human humanitary aid. a member of parliament called the king a trader to islam. >> now in the u.s. president obama attempted to reassure gulf
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leaders he understood their security concerns over iran. john harwood filed this report. >> president obama and the leaders of the gulf arab states concluded a summit meeting at camp david which was about what we expected. this was not attended by the king of saudi arabia. both were widely seen as deciding to skip the meeting out of concerns they have about the united states moving forward after a suspected nuclear deal with iran. the meeting was candid and acknowledged the concerns of the gulf states. said the united states would attempt to address them. >> we discussed not only the iranian nuclear deal and the potential for us to ensure that iran is not obtaining a nuclear weapon but we also discussed our concerns about iran's detablizing activities in the region. the united states will stand by
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our gcc partners against external attack and will deepen and extend the cooperation that we have when it comes to the many challenges that exist in the region. >> of course what those gulf arab states wanted and didn't get was a written defense commitment. now they're going to wait and see if the united states can, in fact conclude this deal with iran by the june 30th deadline and if so whether the united states can materially assist them with defense cooperation in a way that reduces the concerns that they have. back to you. >> still to come on the show gold trading near a three month high on the back of the lower dollar but what's the outlook from here? can it rise? we discuss after this break.
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welcome back. i want to point your attention on flashes coming in on toshiba. it's going to hold a briefing to exam accounting issues. it will hold a briefing at 10:30 gmt on accounting.
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a probe may mean it needs to mark down three years of profit by around 7%. so first this is now a conference being held by the company to examine those accounting issues. you can see the stock ending down by around 3% on the day. but shares were down following results as the 2% revenue growth excluding currency effects was considered too low. the first quarter was in the united states by whatever was a different chinese new year timing and of course volatility of the ukrainian market.
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all together the shares have been trading very well in the beginning of the year. we were up 40%. so with the end of the day yesterday, i think the investors are being cautious and it is quite reasonable to look at the performance of several days not just at yesterday. >> you have a big exposure to asia specific. what are you seeing in that market still? do you think the chinese are still willing to spend as much money on luxury items? >> you know china is a very complex system. we have almost 100 stores. we will be opening five stores this year. so we still believe very much in the market. the larger number of middle class population which is growing and fwroegrowing.
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buying abroad. probably the move for buying remains the same. since we have a strong one i'm confident. china will be the booster of luxury industry for several years. >> let's talk about handbags. this is one of the changes in the product to increase profitability. when you talk about this it's doing the same thing as many other luxury companies. put out a good handbag that sells. what's the key to marketing and producing a new handbag that has an ability to move the needle on profits. >> well you know for us leather goods has always been number one. it's about 79% of the business. shoes are always our number one product. so i think shoes and bags are fighting for the first position and it is probably as strong as
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the author for consumers which have the opportunity and for the younger customer base and probably also for online shopping. >> when we spoke to you last year we talked about the fact that sales to russians were not going to sell and that you expected some on going issues there. they've had a rebound in the rouble. 20% upside since the start of this year. are they turning up in the stores again? >> you know i was in moscow beginning of november. it was at 55. then went to 100 and came back to 56 or 57. that was the rouble yesterday. what changed is mood. of course russians are not traveling to europe in the same way. they don't ever see european
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luxury products. there was a rebound because december january, february march. it was tough locally. but we have invested. we opened two stores in moscow and i think russians are the best customers. it will take awhile. it will come back. >> let's now talk commodities. gold is hovering near a three month high and on track for its biggest weekly gain in four months. this amid some expectations that the fed will push back the timing of its rate hike due to the recent bout of weak u.s. economic data. let's bring in michael. you would think that gold shares would be rallying. it's up about 3% year to date but shouldn't it be much higher given the type of volatility we have been seeing in markets?
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>> i think they're tracking gold prices but if you're looking at it europe is trading within a tight range around $1,200. so there's still a lack of willingness to expose a little bit of capital in the space. >> there's factors working against gold whether it be uncertainty around fed policy demand from india and china and then the stronger dollar. help me understand what's the number one reason gold shares haven't been rallying the way we've seen in the past? >> the first and the third reason. on the fed policy side if the fed is the only one hiking while the rest is easing then that on average is bullish for the dollar. i think in the past year it was bearish and it really effected the entire space. i think right now there's a reevaluation as to how quickly and how much the fed will
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actually hike. so i think rate hikes are gold and the gold equities bank at this particular stage and also it has been for awhile that the u.s. economy is not particularly -- it's not particularly strong. it's good but it's not particularly strong. so you may see rates aggressive hiking cycle and once you have the first rate hikes that provides a good environment for gold to rally. >> the consumer demand story is interesting to me. global jewelry purchases are now down about 3% in the first quarter year over year. part of that due to weakness in india which typically is the biggest buyer of gold. specifically around wedding season but i was speaking to family friends in india and they were saying the money they typically allocate toward gold every year they're now investing that into the stock market because they think stocks will appreciate more than gold. that's a culture shift. >> yeah in india, they started
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to crack down on gold. what you're mentioning now has been for years now and i think as financial markets get deeper and more mature it's going to move away. >> europe had a 16% serve in demand. what's driving europeans, particularly germans to buy gold during the economic uncertainty. >> nominated in euros that's performed. >> so that's the reason. >> it's one of the reasons. gold lost it's luster thanks to a wider availability for property and contemporary art. do you think those factors are at play here? >> gold is a bit of a
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competitor. yeah certainly i think that is one of the reasons why gold has probably faced a little bit of head wind. >> i want to get your call on silver. similar story there with silver having been rallying recently. where does it go from here? >> it's a tough market because it's oversupply. you have too much supply. lack of investor demand. lack of demand from china at the moment and it just makes it a tough proposition. >> okay. we'll leave it there. pleasure to have you on the show. have a great friday. any big plans tonight. >> just going out. >> going out. >> is worldwide exchanged involved. >> friday night. what can i say. >> hit the pubs. thank you, michael. now the secret service have arrested a man for flying a small drone near the white house. it's the latest in a series of incidents in some of the most tightly controlled air space in the world. let's get out to nbc's edward lawrence who is live in washington with more on this
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bizarre story. >> the man was arrested outside the house yesterday. the park on the north side of the white house was placed on lock down. they saw a drone hovering near the white house grounds. the man agreed to land a drone. this is the second incident of a drone in the past five months. in the first case a u.s. intelligence officer had a drone crash on the white house lawn. he admitted to drinking alcohol and was not arrested. in the latest case it comes as the faa started an outreach program to tell people to leave their drones at home when visiting washington d.c. the man in this case was arrested. he was then turned over to the u.s. park police. reporting live in washington. back to you seema. >> thank you for getting us the latest. that's edward lawrence in washington. investigators into the amtrak train derailment in philadelphia are concentrating on the speed
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of the train and the man at the controls. jay grey has more from philadelphia on this story. >> today federal agents released key information uncovered as they continue to investigate the deadly crash of amtrak 188. there were no problems with the track or signals the night of the crash and data reveals 65 seconds before the accident when the train should have been slowing down to enter a turn eight accelerated going from 70 to more than 100 miles per hour. >> just before entering the curve is when the engineer implied the engineer induced breaking. >> he was released from the hospital after the crash. the national transportation safety board subpoenaed his cell phone records and next he'll talk face to face with investigators. >> we look forward to the opportunity to interview him. we appreciate that opportunity. we feel that interview will provide us a lot of information.
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>> we now know the work ended this morning as they pull the body from the 8th and final victims from the rail cars. >> all of the victims we believed we were looking for or trying to identify have all now been accounted for. crews are working to repair one of the busiest lines and say service could resume as early as next week. >> ftse 100 up about .4%. as we were telling you u.k. construction output rising about 4% month over month. let's show you what we're seeing rising expectations of
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inflation helped drive the yield on 30 year u.s. government bonds back above 3%. when you look at the ten year note the yield coming off the highs of the day. right now at 2.19% but you have to keep an eye on those yields and what that means for equities. on that note take a look at the u.s. futures. another big day for wall street. dow with a higher open by 26. the fall out of the fake avon is coming up after this break.
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when bad news is good news. u.s. markets set to continue the rally after the s&p 500 hits a fresh record high. this as investors are betting on a dovish fed policy. mainland shares trade lower amid concerns over liquidity. the hang seng rallies on speculation of a trading link. and takeover filing for beauty brand avon raising questions over the sec's filing process
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after they have shares halted three times in one session. >> king digital crushes it with a 29% jump in quarterly profit but shares fall sharply after hours on a sour revenue outlook. up down and all around. that's the name of the game for u.s. markets. dow up about 36 points. the tech heavy nasdaq had a tough time holding on to 5,000. yesterday the nasdaq was the out performer. a lot of that having to do with apple shares as ubs upgraded the stock. let's keep an eye on premarket as we continue to keep an eye on the bond market. the story could change when u.s. stocks open for trade but right now a rebound in u.k.
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construction sector as well as the euro coming off of its high. that's a boom for european equities. specifically exporters that benefit from a weaker currency. the rebound in construction activity in the u.k. slightly higher on the day. up about .3%. as we were telling you in the currency space the euro coming off three month highs. as you can see yesterday it was at 114 and the incouraging data out of britain not helping steriling in today's trade. implied volatility is the source of concern. right now the ten year is the 2.19% and it's much of its highs. it was at 0.8% this week.
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one of the reasons we have been seeing equities higher. wti crude failing to hold on to the $60 level. that's been seen as a resistance level for wti crude. flat on the day you have to take note of what's happening with gold. it's up about 3% year to date but you would think it elevated volatility in the equity markets and bond markets would send investors into safe haven assets like gold. that's considered a bullish signal for those that watch technicals on gold. let's talk about asia. it's a volatile session in china with shares seesawing between gains and losses. the hang seng has been rallying lead by a spike in property
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stocks but they're still looking for explanation as to why the property stocks were out performing. speculation of a tie up with hong kong and the shenzhen boosting equities but no plans to announce a deal on friday. >> let's explain why we saw that late session up 2% at the close and you're quite right a lot of it had to do with the property stocks and broadly over speculation. speculation in the market among investors that we could see a connect sooner rather than later. it could be earlier than that. early september, october, possibly earlier.
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that's the time frame we're hearing about and that's what got the markets so excited. but the hong kong exchange on their official twitter feed said look there's not going to be any announcement along those lines in the immediate future. so they poured cold water on the speculation but didn't start this rally up. the other going around in the market is hsbc index was up by about 1.5% at the close. there was some speculation during the rounds that we could hear an announcement from hsbc about it. remember that they could redomicile back in hong kong. those were the two factors that propelled the selling in the later session in the afternoon. quickly, shanghai composite on the offensive but up broadly for the week and there's a lot of talk that new issuance ipo is
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going to bleed it away. that's why we saw softness there. >> thank you so much. let's get you a run down of what to watch this trading day. companies continue to deal with the strong dollar. americans are a bit more upbeat about the economy. petrobras reports results after the closing bell. economists expect the u.s. to bounce back after a rough start to the year. gdp contracted at 0.3% in the first quarter due to bad weather and that west coast port strike. they also expect the drag from weak trade and the stronger dollar to disapate. most economists believe the fed will wait until september now to start raising rates.
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joining us now to discuss more is tim hopper chief economist. pleasure to have you in studio. >> pleasure. >> are you in london or new york. >> new york. >> what brings you to london? >> doing a macro trip around europe to gauge activity on the ground. >> i'm sure clients want to understand from you what's happening with the u.s. economy. qe was scaled back in october and since then it's been tough for the u.s. economy to hold on to this long-term and question is what's going on. the fed won't raise rates until perhaps december. >> that's true. we've had a weak quarter but we also expect the federal reserve to begin raising this year but that also means you'll have a
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bounce in the second quarter. so we think there's going to be a balance in march. didn't happen. april didn't happen. we're still looking for it. >> i just find it so interesting but the fact that oil prices moved lower and that did not lead to a meaningful rise in consumer spending. is that a worrying sign? >> it's not a worrying sign too much at this point because it's typical that you'll see a bounce back in consumer spending but it's not at the beginning. at first you have a reduction in cap capex so it's an imbalance in the benefits of an oil price drop. we'll see it in the second half of this year. >> if you the data continues to disappoint, do you think investors will start to question whether quantitative easing worked in the u.s.? the u.s. economy should be firing on all cylinders if qe did work no? >> well we think that qe has worked or has had an impact on the economy but the economy is still sluggish.
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that growth is still moving forward. to fundamentally the recovery is on track. however we expect in 2015 that things should start to accelerate. that's the disappointing part. >> that's the thing because 2015 was supposed to be the year of the consumer but clearly the data pointing to the fact that this recovery is still taking longer than expected. >> yes, the consumer is clearly absent from the picture right now while there's some level of consumer spending it's not what you would normally see in a cycle so we think they should start spending more. if wages turn up that should help but right now we're not seeing it yet. >> but should the dramatic drop in oil prices and now the rebound in oil prices, how does that change the wage growth story which is a big factor when janet yellen is trying to decide when the fed should raise rates. >> we look at oil prices as balancing along the bottom but conditions are now starting to
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appear which will support price growth in oil as we move forward. especially in the second half of this year. that should have a knock on effect on inflation. it should have a knock on effect on the part of the u.s. economy which has been one of the primary drivers of growth in the energy sector. >> i have been trying to get my head around this. profit margins have been improving some what. borrowing costs near all time highs but capital spending is still subdued. >> it's come down dramatically in the energy sector and that of course is very closely related to what's going to happen with oil prices going forward. the rest of the economy is operating at the same level as last year. >> we'll keep an eye on energy and how that weighs on capital spending going forward. have a good time in london. enjoy the city. now are you addicted to your smartphone? you're not alone and you may be contributing to the dramatic drop in productivity in the u.s. and u.k. that's according to the noble
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prize winning economist paul krugman. he said all technology from the iphone onwards had zero impact on the british economy. head to cnbc.com for a full account of his latest theories on product activityivity and why the iphone might or might not be to blame. red flags were raised about the sec's filing system after a phony filing to purchase avon sent the stock on a roerl coaster ride on thursday. bob filed this report. >> it was an odd day for avon which was the subject of a take over hoax. they were having a normal day trading around $6.60 when the stock shot up 5% in a matter of seconds. some firm calling it's ptg capital supposedly filed an offer to buy avon for an exorbitant price. that attracted a lot of attention. the stock reopened and shot up
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again triggering another trading halt. by then they were noticing the filing contained numerous typos and there were rumors it didn't even exist. the stock went in the other direction and was halted for a third and final time. cnbc reached out to avon and they told us they haven't received any offer or communication to a company. they can't confirm they exist. it was a hoax. there's an issue for the sec. how did a phony filing get into their data base. the trading community assumes these are accurate and reliable and vetted by the sec. what happened? no comment from the sec, at least not yet. very strange. back to you. >> all right. now some sad news to report. blues legend b.b. king known as the king of blues has died in las vegas at the age of 89. the mississippi born legend was famous for hits including lucille and rock me baby. he was inducted into the rock
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and roll hall of fame. the guitarist and singer passed away in his sleep. he was hospitalized recently and was in home hospice care. strong can heal from miles away. unite us for a common good. and turn a simple video into endless laughter. strong can take you... all the way to the summit. oh my! so cool! think what strong can do for you.
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questions after a false takeover bid for beauty brand avon and b.b. king dies in las vegas at the age of 89. saudi arabia blasted yemen's rebels after a ceasefire. this as they charged them with killing nine people with a helicopter gun ship. teheran threatened to send a warship into waters to accompany a cargo boat carrying humanitarian aid. it comes as a war of words broke out after a member of parliament called him a trader to islam. now in the u.s. president obama attempted to reassure gulf leaders he understood their security concerns over iran. john harwood filed this report. >> president obama and the
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leaders of the gulf arab states concluded a summit meeting at camp david which was about what we expected. of course this was not attended by the king of saudi arabia. both were widely seen as deciding to skip this meeting out of concerns that they have about the united states moving forward with the perspective nuclear deal with iran. president obama said the meeting was candid and acknowledged the concerns of those gulf states so the united states would attempt to address them. >> we discussed not only the iranian nuclear deal and the potential to ensure they're not triggering a nuclear arms race in the region but we also discussed our concerns about iran's destabilizing activities in the region. the united states will stand by our gcc partners against external attack and will deepen
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and extend the cooperation they had when it comes to the many challenges that exist in the region. >> of course what the gulf states wanted and did not get was a written defense commitment. now they're going to wait and see if the united states can, in fact conclude this deal with iran by the june 30th deadline and if so whether the united states can materially assist them with defense cooperation in a way that reduces the concerns they have. back to you. >> thanks to john harwood. more noise from the music streaming sector as we meet the latest in a line of apps taking on the giants of the music industry. that's coming up after this break.
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we've been getting some statements on the economy from the premiere of china. he's confident of economic growth in a reasonable range for china and the economy still faces considerable downward pressure. he also says he's confident of economic growth but in a reasonable range. those are statements coming from the premiere of china. we did see the shanghai composite end lower in today's trade. now moving on to stock specific news, king dajigital's profiting
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raising 29%. the maker of candy crush warning about weak sales through the first half of the year. a number of players slipped in part because of how it changes revenue. king shares fell about 10% in after hours trade. you can see in frankfurt shares down 20%. netflix may be ready to bring it's content to china. they talked to a web firm backed by alibaba chairman. it's working on a modest launch for china if it can get permission to operate there. let's take a look at how they're trading up 2% in frankfurt. music streaming has had it's fair share of controversy in recent times but it's not stopped a number of services from popping up and taking on
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giants such as spotify and pandora. we take a look at the latest app in line. >> there has been no shortage of headlines in the music streaming sector. from jay-z's relaunch of tidal. spotify's 8 billion valuation. streaming of music surged 54% last year while paid downloads of songs declined by 12%. in a trendy night spot in east london we visited an event organized by one of the new kids on the block. artists upload their music and users have the opportunity to listen to the music as a streaming service and virtually invest in artists they think can do well. >> we really hope that it's an alternative streaming platform that artists instead of uploading their music to the platform and maybe earning
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micropayments from streaming they're given really valuable opportunities. >> unlike the established streaming platforms they aim to cater for the emerging artists helping to build their profile. >> social currency is everything in music now aways. >> trading finds itself in a hotly contested space. getting the foot in the door could be a challenge for the start up. it faces a number of obstacles. competition, opposition from parts of the music industry and fickle millennial user base could mean a bumpy road for the company. they'll need to stand out among the crowd. >> because we're offering something new which is focussing on music discovery and our users
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and artists the time is right for tradio. >> all right. the music online streaming wars continue. let's discuss more with jack kent senior mobile analyst at ihs. what's your thoughts on tradio. do you think it could see the type of popularity that spotify and pandora. >> they offer quite a mass market proposition with millions of tracks. tradio is focussing on looking for discovery and that will help artists get noticed. it's not necessarily going head to head. >> as a consumer does one typically have all three apps on its phone? spotify, pandora google play? >> there's differ types of services for different audiences. you have the more casual user
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that might use a free service. for the more hardcore power user they'll want the $9.99 streaming service and somewhere in between for the personalized radio service like pandora where you pay less or have personalized play lists. >> will wearables going forward change the music streaming industry? >> they might enable new ways to listen to music so you might not need your smartphone if you can get the music on your smart watch. but it won't really change types of service we use. it might just change the way we interact with them. >> apple is coming out with it's own music streaming service this summer. how does that change the market. >> apple has huge scale in mobile. the iphone is selling millions of devices but there are other services. spot identified captured a premium audience already. it has to compete. it can't own the market straight away. >> but even though it's $8 billion evaluation it still hasn't made money yet. that's the big concern. >> profitability is a big issue
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in the mobile and online music industry and the real race is to acquire users. profitability can come later. we need to gather audience first. >> the industry could change when apple enters the space. pleasure to have you on. senior mobile analyst at ihs. you can read more about the competition it faces from larger rivals like spotify and youtube. head to our special tech transformers page on cnbc.com. still to come the results are in. fx survey up top they tell you which ones are a buy and which ones are a bye bye. more on that story coming up.
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i meant to say that. switch today and get the no mistake guarantee. comcast business. built for business. you're watching worldwide exchange. here are your headlines from around the world. when bad news is good news. u.s. markets set to continue the rally after the s&p 500 hits a fresh record high after investors bet on a dovish fed policy. volatility gripping the chinese market. the hang seng meanwhile rallies on speculation of a shenzhen trading link. and fake take over filing for avon raising questions after the hoax forces shares to be halted three times in one session.
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>> king digital crushes it with with a 29% jump in quarterly profit but shares falling sharply after hours on a sore revenue outlook. you can see the dow jones up in premarket trade. a strong day for wall street with stocks rebounding across the board. the best performing sector. stock prices crossed both sides of the atlantic staging a solid rebound thanks to better news showing that a job in initial jobless claims last week pushing the four week moving average to its lowest level. here in europe greece trying to
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tiptoe. the ftse 100 seeing the rebound in u.k. construction up month over month. one reason we're looking at the ftse 100 at session highs back above 3,000. a key level traders watch. the dax it's been a volatile couple of days given the strength of the euro. that's not good for exporters, specifically in the auto space like bmw and volkswagen that make a lot of their sales. overseas today the german market up about 70 points. the cac 40 at 5,066 up about three quarters of a percent. also a rally in the italian market almost 1% or .3%. the other asset class has been currencies. the euro coming off the highs of the week as weak u.s. data weighed on the dollar and pushed back expectations for a rate increase. yesterday we saw the euro hit 114. that was the three month high against the dollar. today it's coming off the highs.
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the euro right now at 113 down against the u.s. dollar. speaking of the tlar the results of cnbc's survey of top wall street strategists are in the conclusion stick with the green back. despite a recent correction analysts remain bullish on the dollar. how will this play out for he perj -- emerging markets. >> stick with the u.s. dollar. that's the message from our exclusive survey. we polled a number of strategists and the results, they're staying bullish. it's been a brutal few weeks for the dollar bulls. after a massive run up the dollar plunged to a low. the euro shooting back up to 114. the dollar has been getting whacked by weak economic data in the u.s. most recently disappointing retail sales but the bulls are hanging in there. strategists see 106 for euro dollar by june and 102 by the end of the year. they're also looking for a stronger dollar against the
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japanese yen. on average they expect that pair to run up to 121 by june. 124 by the end of the year and even stronger next year all the way up to 127. it doesn't mean it's going to be a smooth ride. most of the respondents expect current heightened volatility to continue for currencies. 30% say the wild swings we're seeing will get even worse. they especially like the u.s. dollar against emerging markets currencies. more than 70% of the us. strategists we polled said the outlook there is negative. the big question is why. the federal reserve is signaling higher interest rates are coming. that is bullish. as for what's happening right now the market got ahead of itself buying up the dollar in force last year. jim o'neill said it was absolutely silly how consensus of a trade the dollar was. so what we're seeing now is just a pull back. in the longer term it is a strong dollar story. for cnbc business news i'm
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sarah. >> let's continue our discussion around currencies. good morning how are you? >> good. >> do you think the sell off in the dollar is short lived? >> we have been a couple of times this year talking about potential dollar weakness and i think we have seen that and you've seen a lot of volatility since last october. up until march was up nearly 25 or 30% against a basket of currencies. it's obviously corrected because it got too far too quickly. so it's been down rather against the basket 6% certainly in the last month but i think it's pegged against the interest rates. they're not going anywhere until at least the third quarter if at all this year. i expect that dollar volatility comes down and we see a more
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normal picture against european currencies anyway. >> fed fund futures indicate a 50% chance of a rate increase in december and 34% chance of raise raising rates in october. is 2016 a possibility as well if the data continues to disappoint. >> it's data dependent. the data have been weak. there's a lot centered around oil and the winter weather. it's data dependent. she is watching that and it is about 2% inflation and lower employment so she is committed to doing those and i don't think you see any interest rate hikes. so i do agree with those predictions. >> stimulus provided by the ecb and continues to drive currency over economic data. >> economic data is really important but you're seeing 60
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billion a month from draghi that's going to fuel this growth in europe. so i suspect the rally in the euro is not over. contrary to consensus opinion. >> back to equities closing at a record high despite the volatility in the european bond market. can we see long-term equity appreciation if the s&p 500 is trading above fair value. >> i think so. we have to look at you know the various asset classes today. most of the s&p still yield more than bonds. it's the right place to be. you have an earnings yield of 5 and 6% in equities. you only get half a percent and yellen is looking for 2% inflation. that's being eroded. in my mind equities are still the place to be and they're certainly not cheap but aren't expensive on 17 times. >> but there's still a sustained appetite for yield, right? at some point investors will
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look at the ten year and say 2.2% that looks pretty attractive. maybe i should buy bonds here. >> sure i do agree with that but that's in the absence of any growth and in a deflationary environment. >> it seems that it's wearing off. >> definitely. you're seeing a reinflationary trade at the moment. >> when do we reach the central bank target of 2% on inflation if we're now seeing a sustained rise in oil prices. >> sure. they're weaker this morning. they're still off 30% from their highs. there's no real data out there that shows that inflation is picking up sharply. so i'm not of the opinion that inflation is coming back any time soon. >> not any time soon huh? >> no. >> we'll leave it there. thank you for joining us and discussing u.s. markets. patrick spencer, managing director at baird.
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dear viewer are you addicted to your smartphone in you're not alone and you may be contributing to the dramatic drop in productivity in the u.s. and u.k. speaking in oxford all technology on the iphone onwards has had zero impact on the british economy. head to cnbc.com for his latest theories on poor product activity and why the iphone might or might not be to blame. let's look at the other top stories, the sec and u.s. attorney's office charged a father and son who is an investment banker with insider trading. get this the sec says the scheme helped the father robert stewart make more than $1 million on information related to five health care mergers. it allegedly involved tips in coded e-mails disguised as discussions about golf. a senior banker that also worked at jpmorgan passed information between 2010 and 2014.
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both men were arrested on thursday. and nfl commissioner roger goodell will handle the suspension appeal of quarterback tom brady. he was suspended for his role in the now infamous deflate gate. the nfl player's union which filed an appeal on behalf of brady called for an independent arbitrator to hear the case. coming up who is calling avon? shares of the company spike on a mystery takeover bid that turns out to be a hoax. raising concerns around regulation. more on that story coming up. more and more, data is visual.
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welcome back. the secret service arrested a man for flying a small drone near the white house. it's the latest incident in some of the most tightly controlled air space in the world. let's get more from washington. >> good morning, seema. the secret service moved very quickly on this one. the park on the north side of the white house was placed on lock down. the secret service noticed something hovering around the white house grounds and they moved in. the man agreed to land it. the guy flying the drone.
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this is the second incident at the white house in the past five months. in the first case a u.s. intelligence officer had his drone crash on the white house lawn. he admitted to drinking alcohol but was not arrested. in this latest case comes as the faa, the government agency responsible for the air space in the u.s. started an outreach program to tell people to leave your drones at home when visiting washington d.c. the man in the latest case was turned over to the u.s. park police. his name was not released but eight piers he wanted a better look at the white house. now he's going to be looking at the inside of a jail cell. >> thank you so much. the mystery goes on. a fake bid for avon which caused shares of the cosmetic's company to briefly spike on thursday is raising questions about how potentially market moving news is filed with the sec. landon joins us with more. over to you. >> hey seema, good morning. shares of avon jumped as much as 20% on thursday after an
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apparently nonexistent firm incorporated incorporated offered 3 times it's value. it said it would pay 1875 a share. stock peaked at 8 dollars and was halted three times. it closed up even after doubts were raised about the offer. it contains several grammatical errors and attempts to reach the contacts were unsuccessful. it appears to be a hoax. the fake bid is putting the spotlight on the process under which companies can file documents with the sec. it's called edgar. it's open to companies, investors and people managed to pay filings for others. anyone that wishes to file something can get a password by submitting an online form. in a statement on the sec's site the agency says filers are
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responsible for the truthfulness of their filings and are responsible for actions that are false and disleading. they get 4,000 filings a day. it's the latest in a history of fake takeover bids. in 2011 a firm made a $3 billion offer for american a lines but nothing ever came of it. in 2,000 shares said a fake news release, company ceo was stepping down. they later received a lengthy prison sentence. back to you. >> definitely a shady story. a lot of questions we need answers to. >> you and i could go online and get a password for this. >> that seems to be the case. thank you so much. now on to another story, investigators say the amtrak train that derailed in philadelphia tuesday night was speeding up in the minute before it crashed. the national transportation safety board says a camera
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mounted on the front of the train shows it went from 70 to 100 miles per hour before entering a sharp curve. it's unclear if it was a result of a man yule action by the engineer. records show no issues with the tracks. signals are the train itself. at least 8 people were killed in the accident. now here are your headlines. the rally rolls on. u.s. futures pointing higher after a record close for the s&p 500. questions over the sec filing rules emerge after a false takeover bid for avon and netflix is ready to take it's streaming content service to china. and some sad news blues legend b.b. king known for his king of blues died in las vegas at the age of 89. the mississippi-born legend was famous for hits including lucille and rock me baby. he was inducted into the rock and roll hall of fame in 1987. according to his lawyer the guitarist and singer passed away
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in his sleep. he was hospitalized recently and was in home hospice care.
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reports say the company has talked with several online broadcasting companies about partnering with them. this includes a web firm backed by alibaba chairman. netflix is working on a modest launch for china if it can get permission to operate there. taking a look at price action and shares for netflix, one of the outperformers up about 29% over the past three months and up 2% in frankfurt. avago technologies is looking to buy a rival and reached out to
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maxim. checking shares of these players you can see mostly in the green although avago trading flat on the day. king digital's first quarter profit rose 29% on strong bookings for its games but revenue fell 6% and the maker of candy crush is warning about weak sales through the first half of the year. king shares fell about 10% in after hours trade. this was one of the big movers in yesterday's trade and it is down 20% in frankfurt. keep an eye on shares of king. european markets friday let's take a look at how we're fairing this morning, the ftse 100 holding on around .4%. the xetra dax with a sell off this week because of the implied volatility specifically around the german bund. right now a gain of around 32 points. gains across the screen here. france up about 20 points.
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ftse mib up triple digits. yesterday the s&p 500 closing at a record high. dow jones up about 32 points in premarket trade. imlying a higher open. nasdaq up about 15. let's get you a run down of what to watch this trading day. april industrial production is out at 9:15 a.m. eastern. manufacturing output is expected to have risen modestly last month an just before 10:00 a.m. we get macon assumer numbers. petrobras the state run brazilian oil company that's been under file for months for a corruption scandal reports results after the closing bell. a lot to look forward to. joining us now to discuss is anthony, founder of ma exchange. a pleasure to have you on the show. >> thanks for having me. >> the bond market catches a cold. that's the story this week.
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do you think the sell off continues? >> the sell off in the bond market, the first thing i look at this morning, i want to talk about the stock market first. i think that because we're focussing on the ten year and 30 year bonds that's what traders are watching. they're holding this little minirally they've had over the past couple of days and as we continue to watch data we'll see how the ten year and 30 year bonds react. lately on soft data we see a little bit of a bounce and then they pull back and that has been one of the things that's been making those long stocks a little bit nervous. i think it's a good environment to continue to roll higher. the only thing that could scare this rally right now in stocks besides the headline is the ten year and 30 year start -- selling starts to accelerate to the down side and along side of that happening you start to see the dollar move higher as well.
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that would spook stocks but stocks look like they're going to continue. >> in terms of the bond market does that point to heightenedly quiddity risks or investors basically reevaluating their fed rate hike expectations? >> let's face it when the trades get really crowded, everybody is trading off of the fed. so you're going to get a lot of volatility. it's just about reading the tape. that's why i felt it was so important to see how they were trading. they had a little bit of a bounce. can they sustain it? they have been unable to sustain it. i think the fact that they're sustaining it markets lately make these quick moves in one direction and if they can sustain them the markets go back to itsz ranges. it was important to see them not continue to sell off and going forward once again i just think that watching them is going to
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be the focus of the stock market. >> would you get bullish on the banks if interest rates continue to rise? >> i think you can probably see banks continue to push higher watching the xlf. the xlf has been some what range bound. if rates do start to go higher i do believe that that would help the banks, yes. >> we're seeing a 10% pull back in the utility sector. at what point would you say it's time to reevaluate the trade when it comes to you tillutility stocks. >> to be honest with you that's not something that i follow. i keep a little bit of an eye on it but it's not something i'm overly focused on. so it's not something i follow on a day-to-day basis. >> the rise in interest rates has been putting pressure on
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utilities. the question is how long can the sell off continue. thank you for joining us. a look at stocks and bonds with founder of m and e exchange. now american pharaoh is gearing up for the second leg of the triple crown. a 1.5 million purse is on at the race where the colt faces stiff competition against rivals who finished 2nd and 3rd in the derby t. sport hasn't seen a triple crown winner since 1978 when affirmed took the title. you can catch the coverage on nbc at 5:00 p.m. eastern time on saturday. let's take a look at futures as we head to the end of the show. right now we're expecting a higher open on wall street. facebook apple, google all moving in today's trade. thank you for joining us.
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next up is squawk box. we'll see you monday on worldwide exchange.
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good morning the s&p rallying to a record close. the dow isn't far either. no love for el pollo loco. customer traffic grew at the slowest pace in a year. and are you addicted to your smartphone? if so you're certainly not alone. it always seems to be around me and i feel uncomfortable when it's not. maybe i have this condition, it's called nomophobia. it's friday may 15th 2015 and squawk box begins right now. ♪
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>> live from new york where business never sleeps this is squawk box. >> sad, right, b.b. king. good morning and welcome to squawk box on cnbc. becky and andrew will be back on monday. our guest host today is mike santolli. senior columnist at yahoo! finance. sad news from the music world. the king of blues has died. b.b. king passing away in his sleep at his home in las vegas. he was 89 years old. he made his name playing in small clubs becoming a cutlt hero. he has 18 grammys to his name and in 2006 president george w. bush presented him with the medal of freedom. >> 330 concerts a year for like 30 years and he was playing just

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